Defining Marketing as 4Ps, 7Ps or any number of Ps is a numerical art - is there more than what seems to be oversimplified into Ps? Explore the 'patterns' around us...some call it marketing as well!

Saturday, May 28, 2005

…Bottles’ necks : Juicy Losses..

Last part in this series. After bottlenecks in the Airline Industry, we have a different kind of bottlenecks in the Juice Industry. Following data is taken from different sources:

Of course, the biggest P is omnipresent. No one likes to part with it too easily ;-)Price: Pricing is one of the major worries. Says Executive Director (New Business) at Pepsi Foods, Subroto Chattopadhyay, "Price is a barrier to this category because when you give fresh juice, packaging becomes critical. So, what the industry is now trying to do is offer different packaging to suit different price points while simultaneously working on ways to offer better quality and improved taste."Packaging: This is an interesting one. The costs need to be controlled to keep the prices low. Currently, PET bottles are another reason for the high prices. On the other hand, with the increasing number of health conscious consumers, there is more demand for better and safer packaging. This is reiterated in a report on Packaging, and I quote verbatim:Health consciousness drives demand for liquid cartons• Indians of all ages are becoming health and calorie conscious, showing a preference for healthy beverages like fruit/vegetable juices that contain no preservatives, no colour and no flavour additives. Moreover, in an effort to differentiate the image of juice drinks away from carbonates, these products were introduced in liquid cartons.• Liquid cartons are being favoured since the packaging allows long shelf life, allows preservation of the original taste and flavour and also allows the juices to be stored without refrigeration. Liquid cartons also make it possible to transport the perishable products across long distances, and juices of seasonal fruits can be made available to the consumer throughout the year. Therefore, the growth rate of liquid cartons has been impressive during the review period, and is expected to grow further in the coming years.

Excise : Though the future of this industry is luring, there are apprehensions about the government planning to levy eight per cent excise on food products including packaged fruit juice. This would entail revaluation and resetting the goals and targets for the juice Majors!

Tax Structure: According to Business Line, Pricing is also the downfall of fruit juice importers. Says A. V. Bhaskar, CEO, Adluri Foods, which distributes the Australian brand Berri in the South, "It is difficult to make inroads into the middle class as it finds the prices prohibitive. Sales tax on imported products is not uniform across the States. In Tamil Nadu, it is 21 per cent, much lesser in Andhra Pradesh and Karnataka." So a one-litre bottle of Berri costs Rs 110 while a Tropicana is in the Rs 75 range. This obviates any international presence in the market, wherein the Global players don’t have an option but to enter thru the Franchisee model.

Looking at the future, certain core issues can be addressed, that would drive the growth of the market:Forward and Backward integration – This is one aspect that producers have recently started tackling, and has become imperative as a cost-control measurePrice – Offering different price points to cater to different sets and tastes of the customers. For instance, a 125 ml pack of fruit drink Maaza from Coca-Cola India at just Rs 5 and a 500 ml Tropicana blend for Rs 25.Promotion – Health and hygiene would be the linchpin of the campaigns in the future. A retail owner in Chennai opines on the organized players, “They are more hygienic than roadside fruit juices and are a big hit with yuppies. Also, non-sugar variants find favor with fitness freaks.”Niche Markets – According to me, this is one aspect very particular to the juice market. For this segment, since the consumers have specific needs from the products, be it – Impulse purchases, health conscious buyers, seasonal purchases, regular servings, nutritional values or medicinal prescription, they become more apprised on the specifics and attributes of the product they are looking for. Down the line, the producer and in turn, the marketer needs to be very clear in terms of the content that he is producing, and selling to the customer, and consequently, the customer who is ready to buy that. Specific products for Specific consumers – that’s the key!

Disclaimer: I have not covered Milk variants, and other drinks in the non-carbonated drinks segment. Even the syrups and concentrates have not been covered. I believe they are not a part of the Juice Market! :-)